Electric vehicles are one of the hottest investment themes out there today. Naturally, with a flood of EVs set to hit the market, it creates a huge market for various products that empower EVs, such as ChargePoint (NYSE:CHPT) stock.
After all, without a reliable electric station network, EVs can’t achieve mass adoption. Traders have bid up the EV charging names recently, with ChargePoint and Blink Charging (NASDAQ:BLNK) being huge winners.
But not all EV stocks, or charging station names, are created equal. In the case of ChargePoint and Blink, for example, ChargePoint is only worth four times as much as Blink by market capitalization despite generating nearly 20x as much in revenues.
Additionally, ChargePoint is a reputable company with quality backers, while Blink is dogged by various concerns and lawsuits. As such, there’s a strong case for owning CHPT stock compared to its chief rival going forward.
Blink: A Troubled Company Facing Lawsuits
Short sellers went after Blink last year. In separate reports, two short-selling firms accused Blink of a variety of issues. These were both operational and in terms of management practices.
On the operations side, short sellers said the company had overstated the size and capabilities of its charging network, its partnerships, and other things. And the short sellers also pointed out some questionable tactics in other areas, such as stock promotion.
Months after those two short sellers hit Blink, Citron Research also slammed it with this explosive tweet:
New most ridiculous EV stock is $BLNK. No $$ for R&D, management accused of securities fraud, no real revenues. Expect a massively diluted deal soon so management can continue to deceive public. This should trade right back to $10 where it is still overpriced. Total scheme.
These allegations haven’t gone away. In fact, law firms are suing Blink to pursue these claims. Law office Hagens Berman, for example, is suing Blink, suggesting that the company misled shareholders about the capabilities of Blink’s EV charging stations.
It’s unclear how all of this will play out yet, however it’s clearly enough to raise concerns for Blink’s shareholders.
ChargePoint: A Far Better Alternative
ChargePoint already has tens of thousands of charging locations, which is a massive buildout already given that the industry is still in its infancy. According to the reported network capacity numbers, Blink isn’t impossibly far behind ChargePoint.
However, it seems that Blink’s technology may not be quite on the same level as ChargePoint’s. In addition, ChargePoint’s subscription-software based approach to monetization seems to be a better fit with its customers.
Just looking at the top-line actual revenues, ChargePoint’s advantage becomes all the more apparent. ChargePoint is generating around $150 million in annual revenues. Blink, by contrast, is bringing in less than $10 million annually in revenues. You can debate the technical capabilities of the two companies all you want, but you can’t argue that ChargePoint has been far more successful in monetizing its charging assets.
And, despite the pandemic, ChargePoint has done a good job of keeping its growth trajectory rolling. Particularly with the infusion of cash from its recent financing activities, ChargePoint should be able to build on its already considerable market share lead in the charging industry.
That won’t entirely protect it from competition; numerous other players besides Blink want a piece of the action as well. However, ChargePoint appears to be developing a strong first-mover advantage here, and that should be a pivotal edge going forward.
CHPT Stock Verdict
It’s difficult to judge just how successful ChargePoint will be at this point. The company presents compelling projections for where the business will be in five years from now. If management can hit those, CHPT stock should be successful.
But it’s really hard to analyze how such a new industry will evolve over a time span that long. Much of ChargePoint’s ultimate success will hinge on how quickly EVs take market share, and that’s largely out of ChargePoint’s control.
That said, it’s pretty clear that CHPT stock is a much better investment than Blink Charging at this point. And given the high interest in the sector, being the leading charging company should be worth a lot in terms of sentiment and valuation.
Even if EV stocks correct, CHPT stock should hold its position much more strongly than its weaker rivals. This is hardly enough to guarantee that ChargePoint will be the long-term winner. But at least you own the best player in the field. That’s worth a lot when an industry is just getting going.
I don’t own any EV stocks at the moment. But if I had to pick one, CHPT stock, now off 50% from its highs, would be an intriguing option. If you’ve been waiting for a dip, this looks like a good time to make a move on ChargePoint.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.